BZW fined pounds 100,000 for rule breach in Pace float

BARCLAYS DE Zoete Wedd, the former broking arm of Barclays Bank, was yesterday fined pounds 100,000 and reprimanded by the Financial Services Authority after inadvertently breaching the rules during the flotation of Pace, the electronics group, three years ago.

Amir Eilon, the banker who handled the share sale, was also fined pounds 10,000 and reprimanded. BZW and Mr Eilon are to pay the FSA's costs of pounds 70,000.

The breach that was the subject of the action relates to rule 5-47 of the Securities and Futures Association, the City regulator. This governs so-called stabilisation notices, which allow brokers placing shares to intervene in the market in limited circumstances to prevent the price of a new issue collapsing.

It is understood that Mr Eilon sold some Pace shares held by BZW in its overallotment account in an attempt to stop the share price rising too far in the mistaken belief that this was allowed under stabilisation rules.

In fact, the stabilisation rules exist mainly to allow a firm to buy shares in support of an issue and only allow the firm to sell shares that it had previously bought in order to support the price. In any case, normal City practice is to overallot shares - effectively going short - with a view to buying back shares should there be insufficient demand in the aftermarket.

In this particular case, it is understood that as soon as Mr Eilon realised this was not allowed and a breach of the rules had occurred, further sales were stopped and the matter reported to the SFA. The profits on the sale were paid to charity.

BZW was sold last year to Credit Suisse First Boston. Mr Eilon, who cooperated fully with the inquiry, left the firm in March for reasons unconnected.

The SFA said that even though BZW and Mr Eilon acted swiftly to make good their mistake, it was felt that the breach of the stabilisation regime was a serious matter and that BZW was a well-regarded firm which should be seen to set an example to others. Officials pointed out that the stabilisation procedure is, in effect, an exemption to the insider-dealing provisions of the Criminal Justice Act.

Barclays said that although the firm continued to handle the matter even after BZW was sold on, since it related to events which took place while the firm was under Barclays' ownership, as far as it was concerned the matter was closed. Mr Eilon was unavailable to comment.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory